loss leader

Congratulations to Ashwin, Aniela and Jesus (!) for getting the three OnePlus One invites. Gentle reminder that invites have a time limit, so please place your orders before they expire. Once you get your phones, check out my nine suggestions for improving usability.

With that announcement out of the way, it just occurred to me who should adopt OnePlus’ marketing strategy: Microsoft with the Surface 3. To recap, the OnePlus One strategy is to sell flagship devices to tech geeks as a loss leader to generate hype and demand (see here for the blueprint).

I don’t think the Lumia is a good fit for this strategy as consumers won’t have an easy way to compare the value of a Lumia to an iPhone or Android, so its ability to act as a loss leader is limited. But that restriction doesn’t apply to the Surface, which competes with 300 million PCs shipped every year.

Microsoft should create a Surface 3 that is priced aggressively: one with a beastly Nvidia Tegra K1 chip, pen digitizer, Surface Pro 3 display, and a thinner and lighter profile than its predecessor.

Charge $199 for this device. With Office included.

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Xiaomi and OnePlus proved that it is possible to start a successful smartphone company, even with limited resources. Here’s their strategy in a nutshell:

  1. Create a compelling product for tech enthusiasts
  2. Sell it direct as a loss leader
  3. Limit production to create scarcity
  4. Build awareness and demand
  5. Sell profitable related products and services
  6. Scale production once component costs drop

Small Chinese companies like Xiaomi and OnePlus were able to create markets even while competitors like Apple and Samsung spend billions in advertising their smartphones. Their success is a blueprint for others to follow, whether you’re running an established smartphone company or starting one.

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I had an HTC One before it was unfortunately stolen out of my gym bag. I needed an Android phone, didn’t want to spend much on a replacement as I already carried an iPhone 5S and so got the inexpensive Moto G. An excellent phone for the amount I paid.

Price was certainly an important variable, so when the One Plus One was revealed it caught my attention in a big way. This is a phone with the internals of a Samsung Galaxy S5 but with the amazing price of $300. Wow! The company can’t be making much money at those prices.

But if it’s too good to be true, that’s probably because it is. In the case of the One Plus, the problem is that it’s almost impossible to actually buy.

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